I say spend another 3 months reading books on TA and PA. Then come back and read a book on futures. Then get a simulator for 3 months. Then repeat. Then maybe you can trade. Your inability to understand a simple instrument such as leverage undertones your greater lack of understanding about trading. I encourage you to do the necessary research.
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Futures Leverage?
- Thread starter jonbig04
- Start date
Quote from TraderZones:
If this is your motivation, then you should run away, fast.
You have NO idea how much and how fast you can lose all your money trading leveraged investments. That is what happens to almost everyone who tries it.
Your friend is a fool, and you are about to become road kill
Get away from this idea. Seriously.
haha typical ET. Thanks for the advice. I hadnt yet decided what I wanted to trade, and in listening to my goals, he suggested looking into futures b/c of the leverage involved. I was knee deep in TA books, when i asked the question which is why i didnt do a simple google search. All you had to say is what another poster said: you only pay for a fraction of the amount of the contracts value to trade it. I didnt know that. Its thats simple guys. When i learned that I understood what he was talking about. Its exactly what Im looking for.
A stupid and simple question for sure, but Im not sure why this entire forum automatically assumes im going to dump 100k into an account and start shorting crude futures...come on. I honestly think if someone came on here and said "whats a future?" A lot of you would say "dont ever trade one. go away now. your gonna get destoryed!!" lol we have to start somewhere guys, try to relax. I understand the risks involved in leverage....base on personal experience. I just didnt know how the leverage was applied in futures.
i doubt im going to become roadkill trading fake money....callmmmm down a little bit. Anyways thanks for the advice.
Quote from bkveen3:
I say spend another 3 months reading books on TA and PA. Then come back and read a book on futures. Then get a simulator for 3 months. Then repeat. Then maybe you can trade. Your inability to understand a simple instrument such as leverage undertones your greater lack of understanding about trading. I encourage you to do the necessary research.
Once again, thanks for the advice. trust me i understand leverage...probably better than most people on this forum (its used in a lot more situations than just trading). It was its application to futures I didnt know about.
Quote from jonbig04:
Once again, thanks for the advice. trust me i understand leverage...probably better than most people on this forum (its used in a lot more situations than just trading). It was its application to futures I didnt know about.
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Quote from jonbig04:
Once again, thanks for the advice. trust me i understand leverage...probably better than most people on this forum (its used in a lot more situations than just trading). It was its application to futures I didnt know about.
Jon,
In case you have not figured this out which you very well may have based on what you said you should know a few things.
a futures contract is a contract to exchange money for a product (which may be money as well in cash settlement contracts)
Each party puts up money or its equivalent like a TBill as a security deposit to ensure they have the means to hold the contract.
The difference between the total value of the underlying and the deposit is what people consider leverage.
many people consider leverage the total amount that they can and will be trading. Thesse people generally dont last long. they may have some good trades and go on for a while even making money. then they find their account fulliy invested in one or more contracts and they move against him. This results of a blow out.
Try to never put your account to forced liquidation due to margin calls. It will ruin your day.
Quote from 1Reason:
Jon,
In case you have not figured this out which you very well may have based on what you said you should know a few things.
a futures contract is a contract to exchange money for a product (which may be money as well in cash settlement contracts)
Each party puts up money or its equivalent like a TBill as a security deposit to ensure they have the means to hold the contract.
The difference between the total value of the underlying and the deposit is what people consider leverage.
many people consider leverage the total amount that they can and will be trading. Thesse people generally dont last long. they may have some good trades and go on for a while even making money. then they find their account fulliy invested in one or more contracts and they move against him. This results of a blow out.
Try to never put your account to forced liquidation due to margin calls. It will ruin your day.
That kinda thing can give you nightmares!
What Im still unclear about is how to find out the...i guess you could call them margin guidelines... for difference futures. example: if crude is trading at $130 per barrel how many barrels are there per contract? is it 100 per contract (like options) and is that universal for all futures contracts? more importantly how much of that number (which would be 13,500) do I have to pay to be able to trade the contract? I read somewhere that it varies, but is usually around 5% with the maintenance margin differing from broker to broker. Thanks again for the advice.
The kiddie pool is down the hall, on the left; be sure to don the water wings.Quote from jonbig04:
That kinda thing can give you nightmares!
What Im still unclear about is how to find out the...i guess you could call them margin guidelines... for difference futures. example: if crude is trading at $130 per barrel how many barrels are there per contract? is it 100 per contract (like options) and is that universal for all futures contracts? more importantly how much of that number (which would be 13,500) do I have to pay to be able to trade the contract? I read somewhere that it varies, but is usually around 5% with the maintenance margin differing from broker to broker. Thanks again for the advice.